HOW THE SUEZ CANAL BLOCKAGE UNFOLDED ACROSS SUPPLY CHAINS?!!

                               The “  Ever Given” was lodged in the Suez canal; one of the world’s most vital waterway, for six days, blocking hundreds of ships from traversing the waterway. This is how the vessal – and global trade – can be savaged. The report that the massive container ship that blocked the stretch of the Suez canal is finally re-floating in the right direction is apiece of good news for the Global economy as a whole. The blockage has been the source of much worry and frustration for the global shipping industry.

Why is Suez Canal so Important for global trade?

A simple answer is its location!

Strategically located, the man-made Suez Canal directly connects the waters of Europe with Arabian sea, the Indian ocean and the Asia-Pacific countries.

Without this canal, the ships laden with various cargo’s would have to traverse the entire continent of Africa – the only – alternative -via the Cape of Good hope adding hefty costs and substantially extending their journey times.

The 120 mile (193 km) canal thus was constructed over the course of a decade in the nineteenth century.

The shipping artery plays an important role in connecting Asia to Europe and the Eastern side of the USA.

And the containerized industries that rely on the canal are extremely varied , including large retailers like Walmart, Ikea and Tesco ; the automotive industry; and the technology industries.

Thus it affected everyone basically.

How much did this blockage cost?

The blockage doesn’t just affect the global shipping industry or the Egyptian economy – countless business, from domestic transport providers to retailers, supermarkets and manufacturers all over the world are also impacted.

Lloyd’s list predicted an hourly enormous loss of about $400 million per hour, affecting $9.6 billion worth of trade per day.

Looking at the bigger picture, German insurer Allianz said on Friday its analysis showed the blockage could cost global trade between $6bn to $10bn a week and reduce annual trade growth by 0.2 to 0.4 percentage points.

Besides, prior to pandemic, trade passing through the Suez Canal contributed to 2% of Egypt’s GDP, according to moody’s .

Suez canal Authority chairman Osama Rabie on Saturday said that the canal’s revenue were taking a $14-15 million hit for each day of the blockage .

Also oil prices jumped on Friday, amid speculation that dislodging the ship could take weeks.

Economists says that the Ever Given’s disruption of shipping through the Suez canal probably won’t have an impact on global trade for more than a few weeks, and is unlikely to derail global growth this year as more people get COVID-19 vaccines and economies reopen.

So how did this blockage disrupt Logistics and supply chain?

The global supply chain always focusses on being robust enough to cope with any fallout arising from disturbances occurring globally or from the blockage of the Suez canal. Logistics processes will be able to absorb any problems that will arise from it, as has been apparent in the face of previous supply chain disruptions.

The suspension of traffic through the Suez canal , has created uncertainty across the global supply chain and stocked fears that the port and terminal sector could suffer a new congestion crisis, particularly in Europe and Asia.

According to supply chain experts Wolfgang Lehmacher, the global supply chain network ‘’carries a lot of inefficiencies and buffers” already and has had to cope with trade wars, underinvestment,and the effects of  COVID-19 pandemic , such as border restrictions and closing of infrastructure.

Yet the global supply chainsare still largely functioning , despite all the consequences and impacts of the before-mentioned decisions.

“ports look messy, and the chain disjoined. But eventually, things will fall into place. Thanks to the experienced and extensive problem-solving capabilities of the supply chain and logistics professionals in the industry.”

Approximately 12% of global  trade pass through the Suez canal and its most badly hit volume will be between Asia and Europe, with oil and liquified natural gas (LNG) being badly affected, along with containerised trade.

The International Chamber of Shipping(ICS) said the crisis has laid bare the “fragility of global supply chains and emphasised how important container shipping sector is to the global economy.

“the literal ‘pinch point’ of Suez is a prime example of how an unexpected incident can disrupt the finely balanced system that we all rely upon.

The majority of trade between Asia and Europe still relies on theSuez canal, and given that vital goods including vital goods, vital medical equipment PPE .

As better logistics makes your products more available to an increasing group of people, wise business leaders consider it a very important tool in creating value for customers.  Logistics creates and increases the value business offer by improving merchandise, and ensuring the availability of products.

Logistics is an important element of a successful supply chain that helps increase the sales and profits of a business. Moreover , a reliable logistics service can boost  a business’ value and help in maintaining a positive public image .

Here is the important part of logistics. Logistics plays a key role in the economy in that it supports the movement and flow of many economic transactions . it is an important activity with regard to the facilitation of the sale of practically all goods and services. … If goods do not arrive in the correct place and condition, no sale can be made!!

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